Financing for businesses: 5 solutions to consider

Make strategic investments, enter new markets, develop innovative solutions. Discover 5 business finance solutions.

Whether it’s to expand operations, acquire assets, enter new markets or invest in R&D, businesses finance is key to development, innovation and competitiveness. There is a wide range of financing instruments and strategies to consider, from traditional bank loans to venture capital investments, equity or bond issues on the capital markets or even private placements,. Here are 5 solutions that every business should be familiar with. 

1. Venture capital funding, for large strategic investments

Venture capital is a specialised form of financing suitable for companies seeking large strategic investments, such as international expansion, innovative product development or entry into new markets. It is typically targeted at companies in a growth and expansion phase with the potential for national and international scalability.

Venture Capital Outlook

Source: CSS Partners

This solution involves raising funds from investors who are willing to invest in companies, in most cases through an equity stake in the company. Venture capital is therefore not a loan, which means that the company does not have to make regular payments or return the capital invested. Investors tend to have extensive experience in the sector, networks of contacts and strategic knowledge. This is a good option for companies that want to expand quickly and are willing to give up a portion of their ownership stake in exchange for capital and expertise.

2. Specialised lending: the customised solution 

Specialised lending is a type of financing designed specifically for strategic investments, such as international growth or property purchases. It is generally a medium- to long-term solution that can alleviate short-term financial pressures.
As a solution structured to meet the specific investment needs of each company, it can have special, personalised terms, such as flexible payment terms, competitive interest rates or other bespoke conditions. It is therefore a good option for companies that are in need of significant investment without having to dilute their shareholding.

3. Private equity funding: for mature companies

Private equity financing is similar to venture capital, except that the investors take a significant stake in the companies, which tend to be more mature businesses. In other words, it involves buying shares or entering into agreements that give investors significant control or influence over the management of the company. 

Private Equity: number of transactions and value

Source: Pitchbook

Private equity is therefore particularly suited to mature companies looking to make significant investments or accelerate their growth and expansion. Investors play an active role in the management of the company, working with the management team to implement value-enhancing strategies. This solution should be considered by companies that are prepared to give up a significant proportion of their ownership and are open to management changes in exchange for faster expansion. 

4. Commercial paper, for short-term funding

Commercial paper is a form of funding from institutional investors, such as banks and investment funds, or high net worth individuals.

This is a debt security issued by companies and the interest rate is generally based on market conditions and an assessment of the issuing company’s financial strength.

This solution is characterised by the flexibility it offers companies, allowing them to match the amount and duration of the financing to their cash needs, and is particularly useful for covering one-off investments or working capital requirements.

5. Joint ventures: for business collaboration 

Joint ventures are business collaboration strategies in which two or more companies come together to create a new entity or project. The parties share the resources, risks, costs and profits associated with a particular project or activity. Depending on the objectives of the companies involved, the partnership can be temporary or long-term. 

Joint ventures are formed to achieve specific objectives, such as entering new markets, developing new products, expanding production capacity or carrying out research and development projects. The parties involved contribute resources, knowledge or assets to the joint venture and therefore share ownership, control and profits in proportion to their interests. 

Banco Carregosa, at your side to help you find the best solutions

Choosing the best financing option for a company depends on its characteristics and needs, and on the nature of the strategic investment to be made. Before making a decision, it is important to carefully evaluate each option and consider its long-term impact on the business.

You can rely on the expertise of the Banco Carregosa team. We have customised solutions to improve your business results, according to your needs. Contact us and rest assured that your investments are in safe hands.